Newsroom
The Goldbugg Report – August 10th, 2010
August 10, 2010
-As we said 11 years ago no matter what happens gold and silver are a lock for higher prices. At that time gold was $260 and silver $3.50. We have been dead on and have never wavered, because the game is not over, and as long as the public allows such a corrupt monetary system, it may never be time to exchange gold for anything. Bob Chapman
-John Embry: Gold nears parabolic move up
-Every nickel of my wife’s, my kids, and my net worth is 100% in the precious metals market… 60% silver and 40% gold. We put our kids through college and university on the profits that we have made over the last ten years with money to spare. But the really big money has yet to be made and I’ll stay fully invested until I feel that day has arrived. Ed Steer-Casey Research
GOLD
-To Own Gold is to Vote with your feet where Government is Concerned. Jim Sinclair
-As we said 11 years ago no matter what happens gold and silver are a lock for higher prices. At that time gold was $260 and silver $3.50. We have been dead on and have never wavered, because the game is not over, and as long as the public allows such a corrupt monetary system, it may never be time to exchange gold for anything.
You do not worry about the end game, and the exit. We will know when that event occurs, and it may never occur. You just want your assets in the game. Why, because you have no other alternative. We see no other positive alternative in the face of a breakdown in sovereign debt and rampant inflation. QE will be a backbreaker sending inflation right through the roof.
This will be the end of sterilization and the beginning of monetization by banks, which are sitting on more than $1 trillion and it will begin soon. This will begin another round of monetary debasement, which will further lower the value of the dollar. There can be only one reason that bankers have leveraged the way they have and have wrecked the financial system.
They have done so at the major banks deliberately, by again using QE of $5 trillion. A new level of breakdown is being established that will bring sovereign debt into closer focus as gold and silver reflect this monetary mismanagement. Bob Chapman-Read more here-http://news.goldseek.com/InternationalForecaster/1280932819.php and http://news.goldseek.com/InternationalForecaster/1280685600.php
-Bob Chapman discusses the new IRS 1099, $600.00 on Gold etc. rule & more. Listen here-http://www.youtube.com/user/TheBobChapmanChannel#p/u/2/6NAuFeVbqV4
-John Embry: Gold nears parabolic move up. Read more here-http://www.gata.org/node/8874 and http://www.sprott.com/Docs/InvestorsDigest/2010/06_23_2010%20Gold%27s%20on%20the%20cusp%20of%20a%20parabolic%20move%20up.pdf
-If Gold’s not at $1,500 and $2,000 in the next 18 months, I’m dead wrong Embry. Gold’s soggy summer days are coming to an end and the price is likely to begin a parabolic move upwards, says Sprott Asset Management’s chief investment strategist, John Embry. Historically, summer isn’t usually that kind to gold but, as the middle of August approaches, so the yellow metal tends to rise.
But, this year, according to Sprott Asset Management’s chief investment strategist, John Embry, the rise is likely to be much stronger than usual. Speaking on Mineweb.com’s Gold Weekly podcast, “I would expect the last few months of the year to be quite robust which in a seasonal sense is often the case, but this time I think it’s going to be more robust than usual.
If it’s not between $1,500 and $2,000 in the next 18 months, I’m dead wrong.” Such a forecast is in juxtaposition to those who are beginning again to see slow signs of recovery and suggest that this could well lead to a drop off in the investment demand for the yellow metal that has helped to push up the price. However, Embry believes such arguments do not wash.
“If you can show me how we were going to have a sustainable economic recovery in the western world, then I would accept that line of reasoning, but as far as I’m concerned (and I’m a great supporter of the Austrian School of Economics which deals in credit cycles) our chances of having a sustainable economic recovery in the western world in the next few years is almost zero.
The only way you’re going to have any kind of recovery continuing is if they start throwing so much money at this, it’s going to make your head spin. That couldn’t be more bullish for gold. He adds, “We’re reflecting perhaps most importantly on an announcement late last week by James Bullard, one of the Federal Reserve governors he is the president of the St Louis Federal Reserve he came out and as much as said that the US was lapsing into a Japanese style deflation and that probably another bout of quantitative easing was necessary.
“I don’t think it was coincidental that the gold price was smashed in the month before he made that comment for the simple reason that had it not been, gold would probably be approaching $1,500 that’s the reality and people just don’t want to go there.” Added to the dismal economic outlook, Embry says is the reaction to dips in the price of gold by the Eastern world.
“The Achilles heel of the whole paper gold charade is that physical gold demand, even through this last $100 US smash in the price, remains robust by all basic things that I’ve been looking at, particularly in the east.
The Chinese were just out today [Tuesday] again with more suggestion that the public buy more and what have you, and basically physical gold is moving from the west to the east and when that process is largely finished, then the price is going to go nuts because gold always goes where wealth is being created and it’s most assuredly being created in the eastern world.” Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=109215&sn=Detail&pid=33 and http://www.gata.org/node/8891
-For some perspective on the stock market, today’s chart presents the Dow divided by the price of one ounce of gold. This results in what is referred to as the Dow / gold ratio or the cost of the Dow in ounces of gold. For example, it currently takes 9.0 ounces of gold to “buy the Dow.” This is considerably less (80% less) than the 44.8 ounces it took to buy the Dow back in 1999.
While the actual Dow currently trades significantly higher than its March 9, 2009 lows (currently up 60%), the most recent rally that occurred in the Dow priced in gold is fairly similar to several bear market rallies that have occurred since late 1999. It is also of interest that the Dow (priced in gold) is once again testing resistance of its accelerated downtrend. Read more here-http://www.chartoftheday.com/20100730.htm?T
-Barrick’s bullish gold price outlook. In a conference call with analysts Thursday, Barrick CFO Jamie Sokalsky stressed The company believes the gold price supportive macroeconomic environment will continue in the future, thanks to monetary reflation, fiscal policies and sovereign debt concerns, and trade and current account imbalances.
Meanwhile, Sokalsky noted investment demand has continued to be strong, and forecast that central banks will continue to be net buyers of gold. He predicted mine supply will continue to contract despite what he called a “significant upswing in exploration spending.” Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=108897&sn=Detail&pid=34
-Randgold’s Bristow Sees Gold Prices at $1,500 in 2011. Watch video here-http://www.bloomberg.com/news/2010-08-05/randgold-s-bristow-sees-gold-prices-at-1-500-in-2011-video.html
-Eric King: Pac Man time in the gold mining industry. Read more here-http://www.gata.org/node/8885
-China, the world’s biggest gold producer and second-largest buyer after India, said on Aug. 3 that it would let more banks import and export bullion and allow foreign companies more access to trading. Read more here-http://www.bloomberg.com/news/2010-08-05/gold-may-climb-a-seventh-day-as-china-s-new-rules-to-keep-demand-buoyant.html
-China will help its gold producers expand overseas. China, the world’s largest gold producer, will support overseas investment plans by “large- scale” bullion companies by backing them financially, the People’s Bank of China said.
Banks should extend credit lines to gold producers and offer loans for overseas acquisitions, the central bank said today in a statement on its website. The government will “support” the companies when they issue corporate bonds and help reduce financing costs, it said, without clarifying what that meant.
This is the first time the Chinese government has singled out bullion producers for financial support in overseas purchases. Global gold mining takeovers this year set a record after Kinross Gold Corp. yesterday agreed to buy Red Back Mining Inc. for about $7.1 billion.
China “will place heavy emphasis on supporting large-scale gold producers in their development and overseas expansion plans,” the central bank said in the statement. Read more here-http://www.gata.org/node/8883 and http://www.bloomberg.com/news/2010-08-03/china-plans-to-help-bullion-producers-expand-overseas-central-bank-says.html and http://www.bloomberg.com/news/2010-08-03/china-to-further-open-local-gold-market-improve-tax-policies-pboc-says.html
-China Officially Enters The Gold Market: Full Release Of PBoC’s Plan To Expand And Develop China’s Gold Infrastructure. Read more here-http://www.zerohedge.com/article/china-offically-enters-gold-market-full-release-pbocs-plan-expand-and-develop-chinas-gold-in
-New policy seen increasing China’s gold demand, supporting prices. Read more here-http://www.gata.org/node/8884
-Eastern buyers to support gold market in next 6 months. A survey across 24 countries representing 75% of global GDP found Asian investors likely to buy gold to a much greater extent than Europeans or Americans. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=108980&sn=Detail&pid=33
-Middle East gold sales rise on dip in price. The fall in gold price from its May peak has seen gold sales up around 10% in Dubai and Abu Dhabi showing underlying support on price dips in this important market. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=109086&sn=Detail&pid=34
-Indians tune into gold. Young Indians are casting out old traditions and beliefs about inauspicious times and buying gold; using a slump in price ahead of the festival season as a good enough excuse for bargain hunting. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=109108&sn=Detail&pid=33
-Gold’s latest just a bull market correction. While it is still below its 50-day moving average, if the yellow metal remains above $1,155/oz – $1160/oz, prices are likely to move higher in the next few weeks. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=109034&sn=Detail&pid=33
-Go long gold and gold stocks is the Kondratieff winter with us? Should a drastic fall in stock markets occur, as some economists predict, then gold may offer the best security with some seeing substantial appreciation against devaluing currencies. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=109007&sn=Detail&pid=33
-UBS sees gold investors diversifying into reality. Read more here-http://www.gata.org/node/8882
-Gene Arensberg: Gold a buy, silver not quite yet. Read more here-http://www.gata.org/node/8878
-Ian Gordon: Gold will reach $4,000. Read more here-http://www.theaureport.com/pub/na/6952
-Richard Russell on Gold, the Dollar & Loss of Confidence. Read more here-http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/7/31_Richard_Russell_-_Gold_Could_Rocket_Higher.html
-Pierre Lassonde: Investment, central banks replace jewelry as gold price driver. Listen here-http://www.gata.org/node/8890
-Peter Brimelow: Gold crawls back radical bugs vindicated? Read more here-http://www.gata.org/node/8892
-Patrick A. Heller: Gold movements suspect. Heller writes today about what look to him like developing short squeezes in gold and silver on the New York Commodity Exchange. Read more here-http://www.gata.org/node/8887
-Adrian Douglas: What’s unravelling is gold price suppression. Read more here-http://www.gata.org/node/8876
-Alasdair Macleod: BIS swaps may be last gamble to suppress gold price. Read more here-http://www.gata.org/node/8880
-Gold in BIS swaps said to have come from looted bank customers’ deposits. Read more here-http://www.gata.org/node/8875
-Gold Dinar and Silver Dirham being used in Malaysia . Watch video here-http://www.youtube.com/watch?v=nNtIsSWVJBI&feature=email
SILVER
Gold to silver ratio at 80 to 1 with gold at $1,500 the silver price would be $18.75
Gold to silver ratio at 70 to 1 with gold at $1,500 the silver price would be $21.43
Gold to silver ratio at 60 to 1 with gold at $1,500 the silver price would be $25.00
Gold to silver ratio at 50 to 1 with gold at $1,500 the silver price would be $30.00
Gold to silver ratio at 40 to 1 with gold at $1,500 the silver price would be $37.50
Gold to silver ratio at 30 to 1 with gold at $1,500 the silver price would be $50.00
Gold to silver ratio at 20 to 1 with gold at $1,500 the silver price would be $75.00
Gold to silver ratio at 15 to 1 with gold at $1,500 the silver price would be $100.00
Gold to silver ratio at 80 to 1 with gold at $2,000 the silver price would be $25.00
Gold to silver ratio at 70 to 1 with gold at $2,000 the silver price would be $28.57
Gold to silver ratio at 60 to 1 with gold at $2,000 the silver price would be $33.33
Gold to silver ratio at 50 to 1 with gold at $2,000 the silver price would be $40.00
Gold to silver ratio at 40 to 1 with gold at $2,000 the silver price would be $50.00
Gold to silver ratio at 30 to 1 with gold at $2,000 the silver price would be $66.67
Gold to silver ratio at 20 to 1 with gold at $2,000 the silver price would be $100.00
Gold to silver ratio at 15 to 1 with gold at $2,000 the silver price would be $133.33
-Every nickel of my wife’s, my kids, and my net worth is 100% in the precious metals market… 60% silver and 40% gold. We put our kids through college and university on the profits that we have made over the last ten years with money to spare. But the really big money has yet to be made and I’ll stay fully invested until I feel that day has arrived. Ed Steer-Casey Research
-In my daily conversation with Ted yesterday, he pointed out something that I missed totally and that was the fact that silver’s up-move yesterday [and Friday] broke through all the key technical moving averages in silver in two single trading sessions.
Those moving averages were the 200, 50, 20 and 10-day moving averages. Ted was hoping that yesterday’s rally [like Friday's] was JPMorgan covering short positions but he also ‘fessed up to the fact that it might have been the technical funds sticking their toes back in the water once again. It would be my guess that we’ll find out pretty quickly which group it was. Ed Steer-Casey Research
-JP Morgan ‘covering like crazy’ in silver, Ted Butler tells King World News. Listen here-http://www.gata.org/node/8877
PLATINUM
-Scott Wright Platinum and Gold: The bottom line is platinum and gold have a relationship that goes beyond the preciousness of these metals. And while platinum will ultimately live and die by its own fundamental merits, what happens in the gold markets has shown to color this metal’s sentiment, and thus price. Gold is the bellwether precious metal, so it will naturally have an influence on its peer group.
This influence on the upside usually leads to platinum outperforming gold. And this is exactly what’s played out since the panic bottom. But as the PGR reveals, platinum still has a lot of catching up to do if it is to return to its pre-panic secular trading range. If the PGR continues to trend higher, which it should based on platinum’s bullish secular outlook, much higher platinum prices are in store. Read more here-http://www.321gold.com/editorials/wright/wright073010.html
CHARTS OF THE WEEK-QUOTES-QUICK HITS
-The odds that U.S. GDP starts to contract again by either the fourth quarter of this year or the first quarter of next year are better than 50-50, in our view. David Rosenberg-Gluskin Sheff
-Chart of the week: A Few More Quarters Like This, And Growth Will Be Finished. Last week’s GDP report confirmed a sharp slowdown from the blistering growth in Q4 ‘09 and Q1′10. This look back through recent quarters, published by White House economist Christina Romer, offers a nice visualization of where we might be going. Suffice to say, a few more quarters like this, and that bar will be negative again. This is what keeps James Bullard up at night. Read more here-http://www.businessinsider.com/chart-of-the-day-a-few-more-quarters-like-this-and-growth-will-be-finished-2010-7
-Chart of the week: Welcome To 8 Months Of Jobless Stagnation. This chart, via Calculated Risk, couldn’t be more clear. We’re now on 8 months of absolute stagnation on the weekly jobless claims number, continuing last week with the another report above 450K. Read more here-http://www.businessinsider.com/chart-of-the-day-unemployment-insurance-weekly-claims-2010-7
-Chart of the week: Here’s America’s Nightmare Austerity Scenario. The Congressional Budget Office has released their report on the threat of a fiscal crisis in the U.S. and it makes for informative reading. Most interesting would be the CBO’s two conflicting visions for where the country’s debt levels are headed, and what actions will need to be taken to prevent a fiscal crisis in either outcome.
According to the CBO, if the government follows its baseline scenario for spending, there will need to be additional cuts to spending of 1% of GDP to prevent an increase in the U.S. debt to GDP ratio in the next 25 years. In the alternative scenario, the government would need to make cuts equal to 5% of GDP.
The baseline scenario is spending under current law. The alternative scenario includes changes to law that are anticipated by the CBO (this includes the extension of the Bush tax cuts and increased Medicare spending). In either case, the government could also hope that revenues would fill the gap, but with the current growth rate of the economy, that seems unlikely. Read more here-http://www.businessinsider.com/chart-of-the-day-federal-debt-held-by-the-public-2010-8
-Chart of the week: Donald Luskin: Why This Isn’t Like 1938-At Least Not Yet. Read more here-http://finance.yahoo.com/banking-budgeting/article/110022/why-this-isnt-like-1938-at-least-not-yet?mod=bb-budgeting&sec=topStories&pos=3&asset=&ccode=
-Chart of the week: The US Is No Longer On The Japan Path. Well, at least temporarily our stock market appears to be taking a different path than the great Nikkei bear market. Today’s chart, put together by Doug Short, compares the current path of the bear market to those of other great bears, with each starting right at the various peaks.
A couple weeks ago, it looked like our market was exactly in line with Japan, in terms of timing, and since our economy bears so many similarities with Japan, that timing seemed particularly ominous. But for now we’ve diverged, and if we keep rallying for awhile, the shape of our market won’t look anything like the Nikkei. Read more here-http://www.businessinsider.com/chart-of-the-day-the-us-is-no-longer-on-the-japan-path-2010-8
-A Greek City Just Defaulted On $275 Million Of Debt Can The State Be Far Behind? Since Athens agreed to budget cuts approaching 11% of GDP, local governments have seen a sharp decline in funding. Yesterday, the cut-off caused the city of Piraeus to announce a stop payment on $275 million of debt. Mayor Panagiotis Fasoulas demanded immediate payment of three years of owed funding or his city would abandon its own debt. Read more here-http://www.businessinsider.com/greek-city-defaults-piraeus-panayiotis-fasoulas-2010-7
-U.S. Treasuries not safe for China, ex-central bank adviser says. U.S. Treasuries fail to provide safety or liquidity when it comes to managing China’s $2.45 trillion foreign-exchange reserves, said Yu Yongding, a former central bank adviser.
“I do not think U.S. Treasuries are safe in the medium-and long-run,” Yu, a member of the state-backed Chinese Academy of Social Sciences, wrote yesterday in an e-mailed response to questions. China is unable to sell the securities in a “big way” and a “scary trajectory” of budget deficits and a growing supply of U.S. dollars put their value at risk, he said.
The State Administration of Foreign Exchange, which manages the nation’s reserves, said last month that U.S. government debt has the benefits of “relatively good” safety, liquidity, low trading costs, and market capacity. China’s holdings of Treasuries, the largest outside of the U.S., totalled $867.7 billion at the end of May, down from $900.2 billion in April and a record $939.9 billion in July 2009. Read more here-http://www.bloomberg.com/news/2010-08-03/treasuries-lack-safety-liquidity-for-china-yu-yongding-says.html and http://www.gata.org/node/8888
-Lawrence Williams: Beware the dragon’s gold teeth. Read more here-http://www.gata.org/node/8889
-Hot political summer as China throttles rare metal supply and claims South China Sea. The United States and Europe have been remarkably insouciant about supplies of rare earth minerals so crucial to frontier technologies, from hybrid engines to mobile phones, superconductors, radar and smart bombs. Read more here-http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7921209/Hot-political-summer-as-China-throttles-rare-metal-supply-and-claims-South-China-Sea.html
-Recession was deeper than gov’t previously thought. The recession was deeper than the government previously thought. The Commerce Department, in revisions issued Friday, estimates the economy shrank 2.6 percent last year the steepest drop since 1946. That’s worse than the 2.4 percent decline originally estimated.
The economy’s plunge underscores why the unemployment rate surged to 10.1 percent in October, a 26-year high. The revisions in gross domestic product, or GDP, now show zero growth in 2008. That compares with a 0.4 percent gain previously estimated. The economy also grew less in 2007 (1.9 percent) than earlier thought (2.1 percent).
For all three years, consumers spent less and home builders cut more deeply than had been thought. Those factors help explain the downward revisions on the economy. The revisions also show that struggling state and local governments cut spending more last year than previously thought. And they spent less in 2007 and 2008.
The economy slid into its worst recession since the Great Depression in late 2007. Many economists think the recession ended last summer, although a panel of academics that dates the start and end of recessions hasn’t declared when this one ended. Read more here-http://finance.yahoo.com/news/Recession-was-deeper-than-apf-3247751846.html?x=0&.v=3
-David Tice thinks a U.S. double dip recession is coming. Watch video here-http://www.bloomberg.com/video/61891496/
-Greenspan Says Drop in Home Prices Might Bring Back Recession. Former Federal Reserve Chairman Alan Greenspan said the slowing economic recovery in the U.S. feels like a “quasi-recession” and the economy might contract again if home prices decline.
“We’re in a pause in a recovery, a modest recovery, but a pause in the modest recovery feels like a quasi-recession,” Greenspan said in an interview on NBC’s “Meet the Press” broadcast. Read more here-http://www.bloomberg.com/news/2010-08-01/greenspan-says-decline-in-u-s-home-prices-might-bring-back-the-recession.html
-Alan Greenspan: “The Financial System Is Broke”. Read and watch more here-http://www.zerohedge.com/article/alan-greenspan-financial-system-broke
-Geithner Says U.S. Unemployment May Rise Again Before Declining. Read more here-http://www.bloomberg.com/news/2010-08-03/geithner-says-unemployment-may-rise-again-economy-recovering-too-slowly.html
-Jobless Claims in U.S. Unexpectedly Climb to Three-Month High. Read more here-http://www.bloomberg.com/news/2010-08-05/jobless-claims-in-u-s-unexpectedly-climb-to-three-month-high-of-479-000.html
-America’s Worst Job Market: What 27.6% Unemployment Looks Like. El Centro, Calif., is the largest U.S. city to be situated entirely below sea level. At the moment, it’s also home to the country’s most underwater job market. Nationally, the unemployment rate sits at 9.5 percent.
But in the El Centro metropolitan area, it’s a staggering 27.6 percent. And as workers across the country struggle to navigate the anaemic labour market, El Centro has emerged as a case study about just how fragile the economic recovery can be. Read more here-http://news.yahoo.com/s/usnews/americasworstjobmarketwhat276unemploymentlookslike
-U.S. Consumer Bankruptcies May Exceed 1.6 Million, Report Says. U.S. consumer bankruptcies, after rising 9 percent last month from June, might exceed 1.6 million this year, according to the American Bankruptcy Institute.
The 137,698 bankruptcy filings in July also represent a 9 percent increase from a year earlier, the institute said yesterday in a statement posted on its website, citing data from the National Bankruptcy Research Center. Read more here-http://www.bloomberg.com/news/2010-08-04/u-s-consumer-bankruptcy-filings-rose-9-percent-in-july-from-previous-year.html
-Consumer Spending and Incomes in U.S. Stagnate. Consumer spending, pending home sales and factory orders were all weaker than projected in June, showing the U.S. recovery lost momentum heading into the second half of the year as employment stagnates.
Household purchases, which account for about 70 percent of the economy, were unchanged from May. Read more here-http://www.bloomberg.com/news/2010-08-03/consumer-spending-personal-incomes-in-u-s-unexpectedly-stagnated-in-june.html
-Matt Taibbi: Wall Street’s Big Win. Finance reform won’t stop the high-risk gambling that wrecked the economy. Read more here-http://www.rollingstone.com/politics/news/17390/188551?RS_show_page=0#
-40 Bizarre Statistics That Reveal The Horrifying Truth About The Collapse Of The U.S. Economy. Read more here-http://thetruthwins.com/archives/40-bizarre-statistics-that-reveal-the-horrifying-truth-about-the-collapse-of-the-u-s-economy
-The Bank of England kept its bond- stimulus plan in place and left its benchmark interest rate at a record low as officials sustained emergency aid for the economy during the biggest budget squeeze since World War II. The bank kept the key interest rate at 0.5 percent. Read more here-http://www.bloomberg.com/news/2010-08-05/bank-of-england-keeps-stimulus-in-place-to-aid-recovery-in-budget-squeeze.html
-Scientist Says China’s Oil Spill Bigger Than Exxon-Valdez. Read more here-http://www.businessinsider.com/us-expert-says-chinas-oil-spill-was-really-bigger-than-exxon-valdez-2010-7
-The number of Americans who are receiving food stamps rose to a record 40.8 million in May as the jobless rate hovered near a 27-year high, the government reported. Read more here-http://www.boston.com/news/nation/washington/articles/2010/08/05/food_stamp_use_hit_record_408m_in_may/
-Americans Buy iPads While Broke in New Abnormal Economy. Read more here-http://www.bloomberg.com/news/2010-07-29/americans-splurge-on-ipads-while-broke-in-new-abnormal-economy.html
-How Gangsters Are Saving Euro Zone. Gangsters, drug dealers and money launderers appear to be playing their part in helping shore up the financial stability of the euro zone. Read more here-http://online.wsj.com/article/SB10001424052748704532204575397543634034112.html?mod=WSJ_hps_MIDDLETopStories
-UFO files: Winston Churchill ‘feared panic’ over Second World War RAF incident. Winston Churchill was accused of ordering a cover-up of a Second World War encounter between a UFO and a RAF bomber because he feared public “panic” and loss of faith in religion, newly released secret files disclose. Read more here-http://www.telegraph.co.uk/news/newstopics/howaboutthat/ufo/7926037/UFO-files-Winston-Churchill-feared-panic-over-Second-World-War-RAF-incident.html
-Rockefeller, Perelman Join Buffett’s Charity Pledge. Read more here-http://www.bloomberg.com/news/2010-08-04/rockefeller-ellison-weill-turner-allen-join-buffett-s-charity-pledge.html and http://www.bloomberg.com/news/2010-08-04/buffett-nudges-billionaires-to-give-more-says-every-sinner-has-a-future-.html
-The Rare Colored Diamonds Historical Value Tracker system is the perfect tool for investors to view the potential future value of a rare colored diamond based on the current market trend of a particular type of diamond. Track the potential future value of colored diamonds here-http://www.rarecoloreddiamonds.com/HistoricalPriceTrackingsystem.html
-Watch BTV interview of Harold Seigel on colored diamonds and his website http://www.rarecoloreddiamonds.com/. Watch video here-http://www.rarecoloreddiamonds.com/watchnow.html and http://www.b-tv.com/features/watch-now.html?id=326
-Elizabeth Taylor to Wear $3 Million, Diamond-Encrusted Wedding Turban. Elizabeth Taylor will wear a diamond-encrusted turban worth $3 million at her upcoming wedding to long time companion Jason Winters. The bridal crown, made partially from platinum, was designed by Keith Holman and is adorned with a 30 carat center stone and two 40 carat round yellow canary diamonds.
Holman told BANG Showbiz that he is working with jeweller Christian Tse from Pasadena, California, to make the turban. A team of 12 artists are working on the piece which is being hand woven from silver and gold fabric. Holman is also designing Taylor’s wedding dress, an extravagant kaftan to match the luxurious headwear.
Taylor, has been married eight times to seven different men. Her marriage to Winters, who is 29 years her junior, will be her ninth wedding. The wedding is set to take place later this year and will be attended by around 200 guests. Read more here-http://www.diamonds.net/news/NewsItem.aspx?ArticleID=31941
-The Koh-i-Noor: diamond robbery? The Koh-i-Noor diamond now sits in a crown in the Jewel House in the Tower of London. Neil Tweedie explains why the Indians, and Pakistanis, want it back. Read more here-http://www.telegraph.co.uk/news/features/7917372/The-Koh-i-Noor-diamond-robbery.html
BANKING
-U.S. bank failures climb to 108. Read more here-http://www.bloomberg.com/news/2010-07-31/home-bancshares-buys-two-lenders-as-u-s-failures-this-year-climb-to-108.html
-WSJ bank failure website. Read more here-http://s.wsj.net/public/resources/documents/info-Failed_Banks-sort.html
-FDIC flashes SOS 1,000 bank failures before recession is over FDIC not too far away from tapping into U.S. Treasury $500 billion taxpayer lifeline. Georgia leads the pack with 40 bank failures since 2008. Read more here-http://www.mybudget360.com/fdic-flashes-sos-1000-bank-failures-before-recession-ends-fdic-deposit-fund-empty/
-IMF Says U.S. Financial System May Need $76 Billion in Capital. The U.S. financial system remains fragile and banks subjected to additional economic stress might need as much as $76 billion in capital, according to the results of International Monetary Fund stress tests.
The findings, released today as part of a broader IMF report on the U.S. financial system, suggested that while the nation’s banking system is stable, it remains vulnerable. Home prices, commercial real estate loans and economic growth have the potential to cause shocks that could expose banks to more losses.
Under one scenario, small and regional banks as well as subsidiaries of foreign banks would need $40.5 billion in additional capital to meet a benchmark capital ratio of 6 percent Tier 1 common equity from 2010 to 2014. Under the adverse scenario, those needs rise to $76.3 billion, according to the report.
“Pockets of vulnerabilities linger,” the fund said in the report. The U.S. is recovering from what the IMF called “one of the most devastating financial crises in a century.” Because the economic recovery is proceeding slowly, regulators must be especially vigilant in guarding against risks and weak spots, the report said. Read more here-http://www.bloomberg.com/news/2010-07-30/imf-says-u-s-banking-system-might-need-as-much-as-76-billion-in-capital.html
-Europe’s €30 trillion headache. European banks have amassed €30 trillion in liabilities and face a serious funding threat over the next two years as authorities withdraw emergency support, according to a new report by Standard & Poor’s. Read more here-http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7915246/Europes-30-trillion-headache.html
INFLATION-DEFLATION-QE
-Food inflation ‘could go beyond 10pc before next year’. The cost of food is likely to jump by up to 10 per cent before Christmas after dry weather drastically reduced the amount of winter feed that farmers could harvest, experts said. Read more here-http://www.telegraph.co.uk/foodanddrink/foodanddrinknews/7919406/Food-inflation-could-go-beyond-10pc-before-next-year.html
-Fed’s inflation experiment may treat Americans as lab rats, Rickards tells King. Read more here-http://www.gata.org/node/8879
-Federal Reserve to start the deflation fight next week, expert claims. The Federal Reserve is set to kick-start a new phase of monetary easing, a leading Wall Street economist claims. Read more here-http://www.telegraph.co.uk/finance/economics/7923054/Federal-Reserve-to-start-the-deflation-fight-next-week-expert-claims.html and http://www.gata.org/node/8881
-Fed Printing May Create ‘Final Crisis’: Marc Faber. The Federal Reserve will create a “final crisis” by continuing to print money because it is underestimating the strength of the economy, Marc Faber, the author of “The Gloom, Boom and Doom Report,” told CNBC Tuesday.
Analysts have said the Fed will decide to re-start easing monetary policy, possibly by buying assets, as early as Aug. 10 when the next meeting over policy is scheduled. “Investors should have listened to me already six months ago when I wrote that the Fed will continue to monetize they will print and print and print until the final crisis wipes out the whole system,” Faber said.
Fed Chairman Ben Bernanke has “no clue what the economy is doing,” and the Fed “misread in the last few months the strength of the economy,” he added. He sees “significantly more” quantitative easing ahead. A report in the Wall Street Journal said the Fed might decide on buying government bonds or mortgage bonds again. Read and watch more here-http://www.cnbc.com/id/38534143
-Faber Interview Excerpt on China Economy, Stocks. Watch video here-http://www.bloomberg.com/video/61918448/
-The Keynesians are on the edge of implementing more quantitative easing (QE) as we predicted they would. Bob Chapman
-US Treasury yields fall to record low on Fed’s ‘QE lite’ plan. Yields on short-term US Treasury debt have fallen to the lowest in history on mounting expectations of extra stimulus from the Federal Reserve. Read more here-http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7925216/US-Treasury-yields-fall-to-record-low-on-Feds-QE-lite-plan.html
-Julian Phillips: Why more Quantitative Easing can’t be avoided and will threaten the developed world and the U.S. Dollar. Read more here-http://news.goldseek.com/GoldForecaster/1280710800.php
-Chart of the week: We can understand that many folks just don’t see the deflation maybe it comes down to where they shop or what they buy. But as the CPI bar chart shows, many discretionary items are actually going down in price and this deflation pressure is spreading. Consider that these deflationary forces were in play over the past year with policy-induced 3% real economic growth. Imagine what happens when the stimulus fades and the pace of activity slows. David Rosenberg Gluskin Sheff
-Pimco’s El-Erian Says Chance of U.S. Deflation Is 25%. Read more here-http://www.bloomberg.com/news/2010-08-05/pimco-s-el-erian-sees-25-chance-of-u-s-deflation-double-dip-recession.html
-Puru Saxena: Debunking Deflation. Read more here-http://www.321gold.com/editorials/saxena/saxena080310.html
-Don’t Lose Sleep over Deflation. Read more here-http://www.321gold.com/editorials/pento/pento072910.html
THE BIGGEST LIE ABOUT U.S. COMPANIES
-Healthy balance sheets? They owe $7.2 trillion, the most ever. You may have heard recently that U.S. companies have emerged from the financial crisis in robust health, that they’ve paid down their debts, rebuilt their balance sheets and are sitting on growing piles of cash they are ready to invest in the economy.
You could hear this great news pretty much anywhere maybe from Bloomberg, which this spring hailed the “surprising strength” of corporate balance sheets. Or perhaps in the Washington Post, where Fareed Zakaria reported that top companies “have accumulated an astonishing $1.8 trillion of cash,” leaving them in the best shape, by some measures, “in almost half a century.”
Or you heard it from Dallas Federal Reserve President Richard Fisher, who recently said companies were “hoarding cash” but were afraid to start investing. Or on CNBC, where experts have been debating what these corporations are going to do with all their surplus loot. Will they raise dividends? Buy back shares? Launch a new wave of mergers and acquisitions?
It all sounds wonderful for investors and the U.S. economy. There’s just one problem: It’s a crock. American companies are not in robust financial shape. Federal Reserve data show that their debts have been rising, not falling. By some measures, they are now more leveraged than at any time since the Great Depression.
You’d think someone might have noticed something amiss. After all, we were simultaneously being told that companies (a) had more money than they know what to do with; (b) had even more money coming in due to a surge in profits; yet (c) they have been out in the bond market borrowing as fast as they can.
Does that sound a little odd to you? A look at the facts shows that companies only have “record amounts of cash” in the way that Subprime Suzy was flush with cash after that big refi back in 2005. So long as you don’t look at the liabilities, the picture looks great. Hey, why not buy a Jacuzzi?
According to the Federal Reserve, nonfinancial firms borrowed another $289 billion in the first quarter, taking their total domestic debts to $7.2 trillion, the highest level ever. That’s up by $1.1 trillion since the first quarter of 2007; it’s twice the level seen in the late 1990s. Read more here-http://www.marketwatch.com/story/story/print?guid=855F4051-B0C8-4E82-BFF6-1CAFA8FFFF30
ATTACK ON IRAN COMING?
-But, if the U.S. does attack Iran, the youth of that country which must hate both the economic situation and the social repressions there will “patriotically” line up behind their leaders. The U.S. fleet in the Gulf will serve mostly as a dive site for people in the 22nd century. And the War against Islam could go into hyperdrive. Doug Casey, The Casey Report August edition
-Ahmadinejad ‘assassination attempt’ was a firework, Iran claims. An apparent assassination attempt on Iranian president Mahmoud Ahmadinejad was nothing more than an excited fan setting off a firework, according to the country’s official news agency. Read more here-http://www.telegraph.co.uk/news/worldnews/middleeast/iran/7926881/Ahmadinejad-assassination-attempt-was-a-firework-Iran-claims.html
-VIPS Sends Memo To Obama Warning Israel May Bomb Iran “As Early As This Month”. Read more here-http://www.zerohedge.com/article/vips-sends-memo-obama-warning-israel-may-bomb-iran-early-month
-Mullen says US has Iran strike plan, just in case. The U.S. military has a plan to attack Iran, the chairman of the Joint Chiefs of Staff said Sunday, although he thinks a military strike is probably a bad idea.
Not long after Adm. Mike Mullen’s aired on a Sunday talk show, the deputy chief of Iran’s Revolutionary Guard was quoted as saying there would be a strong Iranian response should the U.S. take military action against his country.
Mullen, the highest ranking U.S. military officer, often has warned that a strike on Iran would have serious and unpredictable ripple effects around the Middle East. At the same time, Mullen said the risk of Iran’s developing a nuclear weapon is unacceptable, although he would not say which risk he thinks is worse.
“I think the military options have been on the table and remain on the table,” Mullen said on “Meet the Press” on NBC. “It’s one of the options that the president has. Again, I hope we don’t get to that, but it’s an important option and it’s one that’s well understood.” Read more here-http://news.yahoo.com/s/ap/20100801/ap_on_go_ca_st_pe/us_us_iran
-Bombers, missiles could end Iran nukes. Pentagon has plan for attack. A Pentagon strike against Iran would rely heavily on the B-2 bomber and cruise missiles to try to destroy the regime’s ability to make nuclear weapons, analysts say, after the top U.S. military officer said a war plan is in place.
The missiles, fired from surface ships, submarines and B-52 bombers, would take out air defences and nuclear-related facilities. The B-2s would drop tons of bombs, including ground penetrators, onto fortified and buried sites where Tehran is suspected of enriching uranium to fuel the weapons and working on warheads.
“It will be primarily an air attack with covert work to start a ‘velvet’ revolution so [the] Iranian people can take back their country,” said retired Air Force Lt. Gen. Thomas McInerney, a former fighter pilot. Read more here-http://www.washingtontimes.com/news/2010/aug/2/bombers-missiles-could-end-iran-nukes/
-President Mahmoud Ahmadinejad said Iran is working on a three-stage rocket to carry a satellite 1,000 kilometres (more than 600 miles) into space, Fars news agency reported on Thursday. Read more here-http://www.breitbart.com/article.php?id=CNG.1fdd62d1d5fae296fbd87d17e1df4c8e.3e1&show_article=1
-Shipping lanes under terrorist threat. Just last week, a Japanese shipment vessel carrying oil came under terrorist attack in the Strait of Hormuz. In March there were serious concerns about another vital shipping lane, the Strait of Malacca.
The world’s shipping companies are tense right now about the threats to oil shipments in these vital choke points. If a single strike was to occur with success, prices could rise dramatically on oil and other shipped products and insuring those ships would become more expensive. Read more here-http://www.businessinsider.com/radar-august-2010-7#shipping-lanes-under-terrorist-threat-4
REAL ESTATE
-Chart of the week: There’s Still This Huge Housing Bubble Yet To Pop. Eyes are currently on China as the next housing bubble to burst, but there may be another lurking to the south. Broyhill Asset Management (via Market Folly) point out that Australia appears to be showing the same signs of bubble that the U.S. did prior to its collapse, and that its growth has continued long after the U.S. correction. Australia has been able to keep up the bubble charade because of an easy credit period. Sounds somewhat familiar, no? Read more here-http://www.businessinsider.com/chart-of-the-day-austrailia-us-housing-prices-2010-8
-Pending Sales of Existing U.S. Homes Decrease 2.6%. The number of contracts to purchase previously owned houses unexpectedly fell in June, indicating demand kept unraveling after the expiration of a homebuyer tax credit. The index of pending home resales dropped 2.6 percent from the prior month, figures from the National Association of Realtors showed today in Washington. Read more here-http://www.bloomberg.com/news/2010-08-03/pending-sales-of-existing-u-s-homes-unexpectedly-decreased-2-6-in-june.html
-The BP oil spill in the Gulf could cost homeowners $68 million in lost property value over the next year and up to $3 billion in the next five years, according to a report released Monday. There are more than 71,000 homes impacted, primarily in the Panhandle region of Florida plus Alabama and Mississippi, according to the report by real estate data provider CoreLogic.
Gulfport. Miss., beachfront homes are expected to be hit the hardest, with an average loss per home of $56,000, followed by Mobile, Ala., ($45,000) and Pensacola, Fla. ($40,000). Overall, the Pensacola area is expected to absorb the largest amount of the lost home value ($1.6 billion), with the Gulfport, Miss., coming in second ($1.2 billion).
“The loss in these markets could be particularly high,” said Mark Fleming, CoreLogic’s chief economist. Read more here-http://money.cnn.com/2010/08/02/real_estate/spill_impact_on_prices/index.htm
-Here’s a graph that was contained in a story posted over at realpoint.com. It shows [in billions of dollars] the amount of CMBS [Commercial Mortgage Backed Securities] that are delinquent as of the end of June. Right now that total is $60.45 billion and is currently on track to hit $75+ billion before the year is out. Ed Steer-Read more here-https://www.realpoint.com/PublicDocDisplay.aspx?i=zrZxBcZuyhU%3d&m=i0Pyc%2bx7qZZ4%2bsXnymazBA%3d%3d&s=LviRtUKXqs8kml5dHt7FTeE2SZmY0Fvqd4iX49Mk/9UapyiFTEO6TA%3d%3d
-China Tells Banks to Stress Test for 60% Home-Price Drop. China’s banking regulator told lenders last month to conduct a new round of stress tests to gauge the impact of residential property prices falling as much as 60 percent in the hardest-hit markets, a person with knowledge of the matter said.
Banks were instructed to include worst-case scenarios of prices dropping 50 percent to 60 percent in cities where they have risen excessively, the person said, declining to be identified because the regulator’s requirement hasn’t been publicly announced. Previous stress tests carried out in the past year assumed home-price declines of as much as 30 percent. Read more here-http://www.bloomberg.com/news/2010-08-04/chinese-regulator-said-to-tell-banks-to-test-for-60-drop-in-home-prices.html
-Beijing Billionaire Who Grew Up With Mao Sees No Housing Bubble. Read more here-http://www.bloomberg.com/news/2010-08-03/beijing-billionaire-who-grew-up-with-mao-sees-no-bubble-in-china-property.html
© 2012, Worldwide Precious Metals Canada Ltd.
www.wwpmc.com
The Goldbugg Report – August 10th, 2010
Posted by Worldwide Precious Metals on Tuesday, August 10, 2010
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